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Enron Mail |
Bankruptcy =09 Today, California Energy Operating Corporation sued Southern California Edi= son seeking payment for November and December power sales, totalling $45M. = This move is likely a sign of things to come. It shows that generators do = not believe that there will be a viable solution from the governor. CalEn= ergy is positioning themselves as a primary creditor. Past experience dic= tates that lawsuits are often used as a means of communication in bankruptc= y situations. In the case of a judgement in CalEnergy's favor, CalEnergy w= ould be able to seize Edison's bank assets assuming there is no bankruptcy = in the meantime. It is another strategy for getting paid without actually = filing an involuntary bankruptcy. However, if there are enough of these su= its or if Edison ignores a judgement in CalEnergy's favor, it will very lik= ely be enough to trigger an involuntary bankruptcy filing, followed closely= by a voluntary filing. The generators are stating that they will not subs= cribe to any deal until their past bills are paid. There currently is no a= rrangement to pay the generators for power they are supplying to the ISO. = Thus, the generators are beginning to see the utilities and the state as on= e and the same. The governor is reportedly trying to come up with a plan that will result i= n the lowest possible rate increase in order to minimize the public's react= ion. The governor has stated that he will put a plan in place in accordanc= e with the "existing rate structure." According to Rosenfield, he is consi= dering a 19% rate increase. This number was arrived at by combining the 9%= temporary, emergency increase passed by the PUC and a 10% rate reduction i= mposed by the legislature under bill AB 1890 that is scheduled to expire ne= xt month. This increase would be put in place for as long as necessary to = pay back the utilities' debt. This plan contrasts enacting a 30% or 40% ra= te increase over a period of a few years. A lower increase over a longer p= eriod of time, coupled with the financing charges over that same period, is= likely to have a detrimental effect on the California economy in compariso= n to its neighbors. Consumer Advocacy Group The consumer groups continue to insist that the generators give something u= p as part of any deal. According to a source close to Harvey Rosenfield, h= ead of a leading consumer advocacy group in California, Rosenfield feels th= e longer it takes the governor to flesh out a deal with the utilities, the = lower the price offered for the transmission assets will be. This is due t= o public pressure on elected officials not to enter into a bailout agreemen= t; the pressure will only increase as time passes
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